— This is the script of CNBC's news report for China's CCTV on June 26, 2020, Friday.
Wirecard will have a debt of up to 1.3 billion euros due next Wednesday, and after the accounts of 1.9 billion euros are "missing", it is believed that the company is unable to repay this debt, so it has to file for bankruptcy. It would also be the first time a member of Germany's main stock index, the DAX, has filed for bankruptcy in its 32-year history, the Financial Times reported. The stock price trend of Wirecard in the last five years is shown here. It is obvious that the stock price of Wirecard experienced rapid growth for several years before 2018. At the peak, it exceeded 191 euros, and the company's valuation reached 24 billion euros, or about 190 billion yuan. The company's shares, which were trading around 104 euros as recently as last week, fell to around 3.5 euros by Thursday's close as the scandal unfolded and spread, wiping out more than 90 percent of their value. How does a publicly traded company worth hundreds of billions of dollars collapse? This can date back to one week ago.
Wirecard revealed itself Thursday when Ernst & Young, the auditor, raised questions about the 1.9 billion euros in its accounts, the company could not provide evidence of the cash, which accounts for a quarter of its balance sheet. In 2018, the company's total revenue was only about 2 billion euros, and this financial report is still suspected of being falsely high. Subsequently, the company further admitted that the funds may never have existed. Wirecard quickly fired CEO Marcus Braun, who had been at the helm for 18 years, last Friday. He was arrested on Monday on suspicion of financial fraud but Has been released on bail. The company's former chief operating officer, who was fired on Monday, is also being hunted down by law enforcement agencies in the Philippines, where he is believed to be in hiding.
Braun spent 18 years raising Wirecard from a company that handles payments from gambling and pornographic sites to a popular fintech company and entered the German blue chip stock index DAX in 2018. In another sign of its popularity, last year it received a $1 billion investment from SoftBank, a Japanese firm. At the time, however, the Financial Times published a series of articles questioning Wirecard's financial problems. Internal and external pressures drove independent audits and gradually uncovered years of fraudulent financial problems.
In a survey last October, KPMG, the audit firm, noted that it was impossible to draw firm conclusions about the existence of some of its 2016, 2017 and 2018 revenues. The financial scandal involves investors such as SoftBank and several large Banks that backed Wirecard. The regulation of the German financial system as a whole has thus come into question.
Tilp litigation attorney
I think there are in fact too many scandals, especially in Germany at this time. I don't want to compare the wire cared matter to a specific scandal. But I'd like to point out that there is a bigger picture that we have obviously a serious problem here in Germany, we need to get better laws, we need to you know find better incentives for whistleblowers that something like this will not happen again.
This case is still under investigation and we will keep a close watch on it.